Stoel Rives | Deeply Rooted Podcast S2E5: Jeffrey Chang, President of FPS Food Process Solutions, On Starting a Commercial Manufacturing Business as an Immigrant and the Opportunities for the Industry

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In the latest episode of the Stoel Rives | Deeply Rooted Podcast, Jeffrey Chang, President, and Owner of FPS Food Process Solutions, joined Elijah Watkins, an attorney in Stoel Rives LLP's consumer products, manufacturing, and transportation industry group. Based in Richmond, British Columbia, FPS Food Process Solutions manufactures and sells industrial freezers globally, including in Europe, China, Thailand, New Zealand, and the United States. In the episode, Jeffrey discusses his journey immigrating to Canada from China, how he became a self-taught engineer, and starting one of the world's largest industrial freezer manufacturers. Jeffrey shares insights including:

• Industrial freezers: More than the freezers you buy ice cream from at the grocery store
• Manufacturing the most hygienic freezers in the world for food quality & food safety
• How Jeffrey and his team take a customer first approach to move the industry forward

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Episode Recap

In the latest episode of the Stoel Rives | Deeply Rooted podcast, Jeffrey Chang, President, and Owner of FPS Food Process Solutions, joined Elijah Watkins, an attorney in Stoel Rives LLP's consumer products, manufacturing, and transportation industry group. Based in Richmond, British Columbia, FPS Food Process Solutions manufactures and sells industrial freezers globally, including in Europe, China, Thailand, New Zealand, and the United States. In the episode, Jeffrey discusses his journey immigrating to Canada from China and how he became a self-taught engineer to start one of the world's largest industrial freezer manufacturers.

More than the freezers you buy ice cream from at the grocery store

Jeffrey describes himself as a self-taught engineer, and after immigrating to Canada worked from an early age in the restaurant industry. Jeffrey said, "when I was 16. I started working part-time jobs in grocery shops and restaurants, a delivery boy, anything - you name it, I've done most of it (in the restaurant industry)." Jeffrey took his knowledge of the restaurant business and designed the initial products for FPS, saying, "pretty much, I'm not an educated engineer. So I learned most of what I have today from the field and application-wise. And, of course, I read a lot of books afterward to confirm what I learned."

Most consumers do not know the types of industrial freezers and their importance to the food supply chain. "Consumers don't have an opportunity to see or understand what industrial freezers are, and they don't have a need for it," Jeffrey said, adding, "you would be surprised how many products actually flow (through industrial freezers)." FPS’s freezers have patented technology for chilling, freezing, pasteurizing, and cooking food products. From chicken nuggets to fruit, to serving the restaurant industry, FPS's products are help ensure quality and safe food products for consumers.

Manufacturing the most hygienic freezers in the world for food quality & food safety

Jeffrey's company has differentiated itself by focusing on making the most hygienic industrial freezers in the world. Jeffrey is passionate about FPS's mission to create these hygienic industrial freezers, which started from his early days working in restaurants. "The importance of food quality and food safety (is something) I was told the first day I worked in a restaurant from my supervisor," Jeffrey said.

There are different types of industrial freezers, including tunnel and spiral freezers, and ensuring they are at the cutting edge of cleanliness is an incredibly challenging engineering problem. "It's complex. You have so many components inside the coil itself, and the coil is the most difficult part you can clean because you're talking about a million square inches of surface area inside that freezer (to clean)," Jeffrey said. To do this, Jeffrey's team moved many of the electrical components of the freezers to be positioned on the unit's exterior, which freed up the ability to create novel cleaning methods that would not damage those electrical components. As Jeffrey described it, "now they are not inside anymore, so that's a key difference. And once we get them out, it's safe, so we don't have to worry about hot temperatures (so it does not damage the electronics). So we turn the freezer into a cooker to clean them." This method allows the freezers also to reach high temperatures when they need to clean them, killing 90% + of bacteria.

How Jeffrey and his team take a customer first approach to move the industry forward

Manufacturing freezers are used for a broad range of products, and it could be easy for FPS to disconnect from the specific needs of each customer. But Jeffrey attributes his company's success to being very hands-on with customer care. "I run the company like a service company," Jeffrey said. "That extra step of understanding the customer's business, their behavior, the way they're doing business, it will significantly help to minimize (any issues) in between. So that's why I say we think on behalf of the customer, and it becomes so important," Jeffrey added.

During the conversation, Elijah asked Jeffrey how he sees the industrial freezer industry evolving as we enter 2023. Jeffrey acknowledges that over the years, many other companies involved in the industry have run their business as a commodity and have yet to focus on building trust with customers, which has stifled innovation." Some suppliers became really greedy and overcharged customers and did not support customers (for maintenance issues), and that's why (trust has been lost in the industry)," Jeffrey said. FPS's approach is to continue building trust with their current customers vs. focusing their efforts on acquiring new customers. Jeffrey said, "for us, as long as we can maintain our customers, all we need is to find a few new customers because the existing customers are growing. So you can easily have double-digit growth, 20-30% or even 40-50% growth, just based on the customers we currently have."

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Episode Transcription

Elijah Watkins

Welcome to the Stoel Rives Deeply Rooted podcast. I’m your host, Elijah Watkins, a trial attorney and a member of Stoel Rives’ Consumer Products, Manufacturing and Transportation Industry Group. This season we’re interviewing respected industry leaders in the Agribusiness, Food, Beverage, and Timber industries and discussing how they and their companies are embracing innovation and capitalizing on new opportunities to move their industries forward in an ever changing world. Subscribe at stoel.com. That’s S-T-O-E-L.com or wherever you listen to podcasts.

Greetings listeners! Welcome to this episode of the Stoel Rives Deeply Rooted podcast. I’m your host, Elijah Watkins. My guest today is Jeffrey Chang, President and Owner of FPS Food Process Solutions, based in Richmond, British Columbia. Jeff is a self-taught engineer who founded FPS in 2010 with the goal of making the world’s best industrial freezers. Since then he’s grown the company to ten different manufacturing and warehouse facilities as well as international sales offices across five continents, including Brazil, Europe, China, Thailand, New Zealand, and of course here in the U.S. FPS customers freeze everything from chicken nuggets and blueberries to hash browns and sirloin steaks. In this episode, Jeff and I will discuss his experience in starting his own manufacturing business, growing that business and the opportunities and challenges he sees in both the short and long term for folks in his industry and commercial manufacturing at large.

Jeff, welcome to Deeply Rooted. Thanks so much for being here today.

Jeffrey Chang

Thank you, Elijah. It is my pleasure and honor to have the opportunity to share what I have in beginning a life as an immigrant with you.

Elijah Watkins

Awesome. Awesome. We’re glad you’re here. So you said “immigrant.” I kind of want to touch on that first. I want to start a little bit with your background, and kind of your story. If I remember correctly, this was years ago, you and I were having dinner at a fancy pants restaurant in downtown Vancouver, I think. And you told that you moved to Canada from another country as a teenager and really had to work hard to get where you are today. Could you tell us a little bit about that?

Jeffrey Chang

Yes. When I was a teenager, approximately about the age of 15, I immigrated from China, without speaking a word of English. So it was not my choice because my parents hopefully brought me to a better education and hopefully end up to be a better life. So I came along and ended up liking it and studied over and learned English. People joking me at school because I was a little country boy and the way I dressed. But anyway, I learned, adapted to it, and since then I, second year when I was 16 I started working part-time jobs in grocery shops and restaurants and delivery boy. Anything, you name it, I’ve done most of it. And while the base of it is I needed to survive.

Elijah Watkins

So tell me, how do you go from that? How do you go from, you know, you don’t speak any English, you learn English. You’re working as a delivery boy at a grocery store and everything in between to, you know, where you are today, learning the ropes. Self-taught engineer, is that right?

Jeffrey Chang

Pretty much. I’m not a educated engineer, so I learned basically most of what I have today from the field and application-wise. And, of course, I read a lot of books afterwards to confirm what I learned. But mostly I’d say yes, I taught myself a lot of things.

Elijah Watkins

That’s incredible. So I’ll admit that before we met, I really had no idea what an industrial freezer was. I think I thought they were those freezers that you have in the grocery store where they keep the ice cream or those big walk-in units where you get the organic spinach at Costco. But FPS, you’re doing something a little more cutting edge. Could you explain to those listening about what it is that FPS actually makes and generally how they work at high level. We’re not self-taught engineers here, so high level, how does it work and what are they?

Jeffrey Chang

Well, I think most people probably don’t have too good an idea what industrial freezers are. Just you and I met at the beginning the same way because consumers don’t have the opportunity to really see or understand what industrial freezers are. And then they don’t have a need for it.

Elijah Watkins

Yeah.

Jeffrey Chang

So it’s more for, yeah, you need to dig deeper into major processes and like you just mentioned from chicken nuggets to blueberries to hash browns. But it’s totally related to everything you see from the frozen aisle or the fast food chains, anything from, any name of the fast food to other giants. You’d be surprised how much products are actually frozen. So what FPS is different, differentiate ourself compared to other places out there, it’s, we… well we were small at that time, It makes it a lot more easier to for us to set up different… set up different goal and vision and what we try to do. The bigger the company, the harder the change. So since it was our advantage and also we had nothing to lose. Or you can call it just a gamble because we had nothing. So I raised my hand and told my team and also a year later we speak to the market that we want to be most hygienic builder in earth. So basically on earth is … while people would laugh at it, I say, “Well, why not?” Why would we just want to restrict ourselves in Canada, U.S., and North America. Wow, we don’t know how long it will take, but, hey, come on, it’s just a goal, right? If we make it there, we’re happy. If we don’t, so what? So, but in fact, we did make a through. So what is important is I’ve been coming to my early age working in restaurants. How important hygiene it is. How important foot quality, food safety is. Because I was told the first day in worked in a Western restaurant that my supervisor told me, he said, “Hey, Jeff, come into the walk-in cooler. And everything that you look at is now, that everything you look at that smells, everything don't like it or you don't even dare to eat. That's the bare minimum. Throw them in the garbage can. Yeah, that's how it got started. I had no clue because I was new. But at least you can see from your eyes and food change color and you can smell them. But that that was the minimum basic I learned. But from there I took it to many, many levels. So you got to start from somewhere, right?

Elijah Watkins

Yeah, yeah. OK, so here you are. You know, you're working in a restaurant and you say OK, food can go bad. Check. And if it smells bad, looks bad, throw it out. Check. But then you turn that into “I want make hygienic freezers, the most hygienic freezers in the world.” What is that? What is a tunnel freezer or a spiral freezer? And what makes yours more hygienic than the next company’s?

Jeffrey Chang

Tunnel freezers, spiral freezers, almost any type of freezers, it basically became the most, really the most difficult part of a single component in a processing line to be cleaned because it's complex. You have so many components inside the coil itself, or what’s generating the cold. That is the most difficult part you can clean because as you're talking about 1,000,000 square inches of surface that is inside that freezer. So how are you going to clean it? So people say, yeah, we got them clean. But the majority of the nation is looking at what they consider it's clean it's what they can see from their eyes.

Elijah Watkins

Yeah.

Jeffrey Chang

But how can you see through that many square inches in that box. It's impossible.

Elijah Watkins

Yeah.

Jeffrey Chang

So the idea is how we're going to be improving it to make it most access and find… even though we can get it lot more improvement and access. But we'd never be able to confirm because we can't see it. We can't touch it. Then how do you know it’s clean?

Elijah Watkins

Yeah.

Jeffrey Chang

So, this is why scratching their head, they say, “Hey how we gonna get there?? So if you ask me today, you say, “How is… can you guarantee your freezer is clean after you wash it?” I say, “No, nobody can.” If somebody in the world is telling you you can, the only one way is fill the whole freezer up with solutions. And let them in there for hours and drain them and refresh them. You’d know because it's flooding. But, yeah, we cannot do that because there's a lot of electrical components, a lot of item, EM motors, anything you name it, lights, cables, junction boxes inside the box and outside the box. So a lot of things not quite practical and limiting us as to what we can do. So, and then another level is well if we can get some of the components out, that already make it much better, because like I just said, junction boxes, cables, motors, gearboxes. How about I get them more outside the box.

Elijah Watkins

Yeah.

Jeffrey Chang

So we started thinking how we can build all the structure and using our enclosure like your wall and ceiling of your roof and in your house and how we're going to mount all those major components, on the wall, on the ceiling. So we can get them out so we don't have to run the cables inside. So we immediately eliminated 90 plus percent of those items on the outside, which is lot more easy for cleaning.

Elijah Watkins

Oh, that's interesting. So you've got this tunnel freezer and, forgive me, I'm an Idaho boy and so I know about potatoes. You've got… a potato comes out of the field. It’s hot. They clean it. They spray it down and they want to freeze this potato. It gets on a conveyor belt, comes in, one end on your freezer. And when it comes out the other end, it's frozen and you can put it in a package and send it to the grocery store. Is that right?

Jeffrey Chang

Yeah, you can.

Elijah Watkins

It’s really just the …

Jeffrey Chang

Mostly they'll go into a cold storage and waiting there for logistics and that be the grocery store and go into one of the fast food service stores.

Elijah Watkins

French fries or what not.

Jeffrey Chang

Yeah, whatever, yeah, your french fries or you can say potatoes and, yeah, all different type at the end of it. Yeah, when they're passing through the tunnel it will be frozen.

Elijah Watkins

OK. OK, so what FPS did is instead of having all of the cables and motors on the inside of the freezer where you can't take a hose and spray it down because it'll ruined. It'll fry the electricals. You move them on the outside of box and that allows you to clean the inside better?

Jeffrey Chang

Well, number one, if we imagine your house, you have all the tables and chairs or the support for the table. But imagine you have only have a table, but without the legs on it.

Elijah Watkins

Yeah.

Jeffrey Chang

Imagine how easy for you to clean underneath because it's always the most difficult thing… who is going to look at underneath the table?

Elijah Watkins

Yeah.

Jeffrey Chang

Right? So if I don't have them, then I don't need to clean them. So that’s a concept, but…

Elijah Watkins

OK.

Jeffrey Chang

But how, if somebody is complaining it's hard to clean, but you've nothing to clean. But we're not there yet. I don't think we're ever going to be there. But if we can eliminate all those surfaces, all the support structure, then we don't need to clean them. So that's what exactly what we did. So we once all the… remember all the motor, gearbox, mounting brackets, cable trays and cables, junction boxes. Now they're not inside anymore or 95 or 98 percent. 99% of them are outside now. So…

Elijah Watkins

Yeah.

Jeffrey Chang

… that's the key difference. And also once we get them out, then it's safe to heat up the inside of the freezer, the tunnel, because we don't have the motors. We don't have the junction box. The cables in there now we don't worry about that, the hot temperature because like you say, you were gonna fry them. Besides water, temperature also gonna fry the cable.

Elijah Watkins

Yeah.

Jeffrey Chang

Now we can actually turn a freezer into a cooker. So we all know when temperature is hot enough. That's why how why we cook stuff, right?

Elijah Watkins

Yeah.

Jeffrey Chang

We cook them, we kill so it's safe to eat. That's why they cook. So we turn the freezer into a cooker. The same concept because nobody can guarantee… I already said nobody in the world can guarantee 100% clean after it’s washed because it's impossible. Then doesn't matter if it’s 90% or 99. Of course we try to get it to 99. But 99 is not enough. 99.99 is not enough. And how about we cook it?

Elijah Watkins

Oh, that's interesting. So you're making a box, uh, a tunnel, an industrial freezer that can get really, really cold to freeze something. And then when you want to clean it, it can get hot enough to kill the bacteria on the inside.

Jeffrey Chang

Correct. So basically what we call pasteurization.

Elijah Watkins

OK. All right, so that that's interesting. So walk me through how this works on the customer end, which would be, you know, an industrial company. So, you know, I'm a farmer or a rancher, or a burrito maker, and I want to get my product frozen and ready for shipping. So I call up FPS and I ask for a freezer. Walk me through what happens next. What's the design process? The manufacturing process? How do you go from concept to having a final piece of equipment, you know, ready to delivery.

Jeffrey Chang

Yeah. While we are lot more bigger and lot more standardized today but as the early stage and even though today, while it's the first step we will sit down and listen to that client, potential client, what their needs are because everybody’s thinking a little bit different or some just looking for cookie cutter. So we will spend the time and understand the product type, the product range and then these, the capacity, and then how their location is going to be and then what their logic is there going to be, atmosphere temperature. And then after we gather all that information and understand the capacity, and it's important their future needs. And those clients will not understand. They just say, “Hey, this is what I need today.” I would say probably 50 to 75, 50% of the clients to just tell you the story. So it's for us to ask a lot of questions.

Elijah Watkins

Oh, that’s interesting.

Jeffrey Chang

Are you sure. do you, do you consider you're gonna need a 20% growth in three years? Or you're gonna need something bigger later on? Because, like you say, like a farmer, a farmer may be looking for something really small, but if a processed giant, they looking for something really big then that’s easy because they have the funding. They're going to add multiple factories, multiple lines. So that would be like a drying unit.

Elijah Watkins

Yeah.

Jeffrey Chang

But like you when you say a farmer. So a farmer could be wearyfrom buying something for 2,000 pounds hour all the way to 10,000-20,000 an hour. So somebody will come in here say, “Wow. We need something really small today.” Then I said when you're starting something a starting point, you need something small.

Elijah Watkins

Yeah.

Jeffrey Chang

Nobody wants to put in millions and millions of for just to say, “Hey, we have the confidence we're going to be, have all these products going to be sold.”

Elijah Watkins

So your job… I like how you said that. They'll tell you the story. They'll come in and say, “I've got this food product and I need to freeze it, so I can ship it and sell it at a grocery store.” That's the story. And then it's up to FPS to know what questions to ask to say, well, have you thought about this? Have you thought about that? How have you come up with those questions? I mean, how do you know what to ask? Is it just from experience, trial and error?

Jeffrey Chang

Yes, from experience. What’s most important is you think on behalf of that potential client because this is really important. If I always ask myself and train our team and say if I'm the client, what do I need?

Elijah Watkins

Yeah.

Jeffrey Chang

So the only one way is to go into the shoes and my understanding. Of course, like there is over the years to practice and give us a lot of information that we pretty much know what question to ask. But how are you gonna get started. So is it… because it's like, say, if I, if I'm the client, I just want to say “Hey, I produce maybe… all I need is I produce maybe 30,000 pounds of blueberries a day. But all I need is if I splitting out with 10 hours, I need 3,000 pounds an hour, so I can freeze them, right? But obviously they're not going to stop from there. They're going to be looking for something bigger because all the freezers, they are not proportional in price. The bigger the cheaper by capacity because it's always a base design. Every freezer is always an entry and the outlets. So all those are fixed costs, right? So if we look at it, if the 20-30% is a fixed cost, so the 70% then it become proportional material cost. So that means bigger the better. The bigger the cheaper. So I always ask the question they say, Are you sure it's three to five years? Because the lease, you don't want to replace the freezer because the freezer last 20 to 30 years. You don't want to touch them. But paying a little bit more money that you allow you to have some growing. Or somebody say, “Oh today I need 2,000 pounds. I buy 2,500 pounds.” But I can tell you by experience, many customers come back two years later and said, “Yeah, I wish I listened to you because I already grew two times already in the last three years. My freezer is all the way in the bottleneck. Now he go into second, which is a good problem to have.

Elijah Watkins

Yeah.

Jeffrey Chang

We try to be helping the customer to understand what the longer term, not 20 years, at least three to five years.

Elijah Watkins

Yes.

Jeffrey Chang

So what they need to save money because they don't see. So why you didn't tell me? So we always when… imagine just like you the same way, when you practice you always think behalf of the client and think about them because most client, they don't ask that many questions. Sometimes they even say, just like you go to a phone stores. You say, give me the spec and then I choose which phone I like. But we're talking about equipment in the millions of dollars. So it's not a cookie cutter.

Elijah Watkins

These are all custom built machines.

Jeffrey Chang

Exactly. Even though it's not 100% custom, but it's some sort of custom, right?

Elijah Watkins

Yeah.

Jeffrey Chang

So it’s a capital equipment that you want to keep a long, long time, right? So this makes it so important to understand what the customer needs and only one way is getting to them, spend a lot of time with them. And well, the good thing is because I came from the ground. I took many years to learn from them. And then, after I learn from them, create solution and give it back to them. So it makes me a lot more easier. But if somebody is newcomer coming in, it's probably gonna take years to spend time with on the field, with the customer, even how they have us and how they bring the product in, what temperature and each step how can we improve it? Some customers have a lot of experience. Some customers have zero. So it doesn't matter. We have to be prepared, right?

Elijah Watkins

And so FPS started in 2010. What are you up to in terms of headcount? How many employees do you guys have now throughout the world?

Jeffrey Chang

Today globally around 700. Canada alone with 500.

Elijah Watkins

Oh, wow. Wow. So you’re shipping these freezers all over the world?

Jeffrey Chang

Uh, yes. Pretty much over the world. Also that we’ve expanded globally. That’s will support our customers. So what our concept is, we gonna be globally localized ourselves to support our customers. So if our customers say, “Hey,”… if our local customer, like a US-based customer, he wants to put a factory in, let’s say, the Middle East, North Africa, in South Africa, or any place you name it. We are really willing to go there to support it and eventually to build a center locally to support it when it’s warranted, it makes sense.

Elijah Watkins

Oh wow. Well, so I mean it… that just sounds like a logistical nightmare. How do you get… You’re in Canada. You said you have 500 employees there and you need a freezer in, you know, Chile or you need a freezer in Anchorage, AK. How do you get just the raw materials to build those things and then get them on a boat and ship them around? Walk me through that process.

Jeffrey Chang

Well, you're exactly right, especially the last year and a half, two years exception.

Elijah Watkins

Yeah, I mean the pandemic did probably not treat you well, right?

Jeffrey Chang

Oh yeah, you're right. And then not because the ocean freight price went up to the roof 5, 6, 7 times the cost and the delay. And yeah, it's to a point that it's manageable. I mean because it's always problems. Always things will happen. This is exactly what the world is today. Every day we need to prepare and adapt to it and create a solution to counter what the issue is going to be. So thinking ahead and looking at scheduling and looking… that's why expanding the global manufacturing you make things easier. But in fact, nobody's perfect. We have shipments being delayed six weeks, going to Europe because unexpectedly the boat stopped it two times without knowing, we knowing it. So that's why… and then they delay on other ports that we don't know. But in the past these things just don't happen. Well, it will happen, but very rare. But today because the cost of the shipping company because they have more loads to pick up and then the boat is so full, it takes them longer. And then the port people are not working the hour and probably don't have enough people with COVID restriction. When everything adds up together, it's just a nightmare.

Elijah Watkins

How do you manage that? I mean, you've got customers that have… you take the farmer, for example. They've got a product, a vegetable and it's rotting in the field. So they’ve gotta get it out of the field. They gotta get it frozen. And you've got a grocery store that says I've got empty shelves. I need this on my shelf. Otherwise I don't have something to sell. And you're kind of the bottleneck, right? You're the freezer that makes that stuff get on the shelf. How do you manage those expectations? Or how did you manage those expectations during COVID when kind of that things were falling apart?

Jeffrey Chang

Well, we would… we set up a full team to handle those issues, but still run into really unexpected situations.

Elijah Watkins

Yeah.

Jeffrey Chang

So the company actually did spend a lot of additional costs. So, for example, if we're going to run into like, for example a four week installation. If we run into a three weeks delay, how… we're not going to ask the customer to postpone the project for three weeks. Like you say, a farmer if the product comes in, they don't get them frozen, they're gonna lose the season.

Elijah Watkins

Yeah.

Jeffrey Chang

A smaller farmer could even go bankrupt because they committed to the customer that this work and the delivery to you. So we'll do anything we can to… like your example, we run a double shift. We have people in there. We plan ahead and say once the container come in and then we're gonna in sequence how we're gonna install them. So everything we can think of by knowing the shipment is gonna be delayed. But unfortunately sometimes the shipping company won't tell us until last minute. So that's why we're team is tracking the boats and tracking the container, tracking where they are, even though locally with just the truck…

Elijah Watkins

Yeah.

Jeffrey Chang

… could be delayed. So we… it’s just like I say, everything that happened in the past, this is become ten times. 100 times. That's all. So we just need to react to it really quickly and take control of the situation and so every time when it happen, how the team going to be react to it and minimize the damage. And so I guess it's a relatively speaking, everybody's not doing good if it’s compared to before. But it only matters who's doing better, right?

Elijah Watkins

I like that, yeah. And has FPS kind of weather that storm? It’s found itself doing better than maybe the next guy coming down the street?

Jeffrey Chang

Uh, I believe so. We did and we continue doing that because it's the, what the customer sending us orders from later part of 2021, early part of 2022 is telling us. We're doing good.

Elijah Watkins

Yeah.

Jeffrey Chang

So that's why orders are coming in. We have backlogs all the way to 9-10 months of backlogs and orders coming in super strong second-half of 2021 when COVID got eased a little bit. So I guess the result would tell you whether the customer relies on you or not.

Elijah Watkins

You know, it’s interesting, you said earlier about, you know, you needing to know the customer to ask them the questions and everything and then hearing you talk about a farmer, whether it's a small farmer, big farmer, maybe they go bankrupt because they don't get their product in, it strikes me you need to know not just on the design phase about the customer, but really how their business works and keep a pulse on that. With the range of products that your freezers freeze, how do you do that? How do you stay up on what's important to a fish farmer and a potato farmer and a processed food maker? How do you kind of know where their soft spots are and where FPS can add value for them?

Jeffrey Chang

Well, most of companies will be just selling a product.

Elijah Watkins

Yeah.

Jeffrey Chang

I rent the company like a service company. No matter how good a product you have, just like a car, no matter which car, which car brand you're gonna buy, they’re going to break down eventually one day, right? More or less, There’s no car that’s not going to break down. So based on that, by understanding, so that extra step of understanding the customer’s business, their behavior, the way they're doing the business, you significantly help to minimize the issue in between. So that's why I said we think on behalf of the customer. That it becomes so important. If I'm the customer, if my business, what is the sense of urgency. But, of course, everybody is have a sense of urgency. Then that means you're going to put everyone in top priority, which is then is no top priority. Everything is in priority. But how you going to sense that, which customer you want to be as more urgent so you can… Well, everybody have limits, right? We have limited capacity. We have limited resource. So it’s not open chat. So, but how we're gonna move the people to help the people that is needed more urgently as today than the other one that may have a few more days to buy. That's become so important. So that's… there's nothing you can do by sitting in the office and try to do your job by looking at numbers. So the only one way is update. You sell them the product. That's just the beginning of the process. People sell it. “I sell you the product. It’s yours.” But no, selling the product and putting in the customer side is just the beginning of the life cycle of that product.

Elijah Watkins

It's interesting. That's interesting. I like that. We talked about FPS, the company, in relation to its clients and its customers, and kind of how you fit in as the president of the company for that. I wonder if we can look the other way and say, all right. Here's this company that's got 700 employees scattered throughout the world, COVID restrictions – and of course those are lightening up now and have gone away in other instances – but how do you manage that body of people under these intense, intensely stressful situations with, you know, constraints and financial costs and just kind of burnout? How do you manage people?

Jeffrey Chang

It’s, yeah, it’s… wow. I don't need to tell you. Everybody would know it's a challenge. I think even friends and customers, suppliers, we can see a lot of people that actually they burnout through those times because the pressure, how to get things done, and then your phone rings. And especially for us, like I said, if we look at Europe and then it was so bad in some point of the COVID restriction and then our team was new and then in Asia and look at the New Zealand and even in Brazil. We started with most of our international divisions and back in either later part 2018 or later part of 2019 just before the COVID. So the teams are new. But at some point you almost just tell them, you say it will be fine. We're losing money over there, but don't worry, we're not gonna closing it. So just be patient and just hang in there. At some point almost just to tell them say, don't worry about it but just hang in there. Just hang in there. We're going to live through this. Hopefully we're going to go through this hurdle without bankruptcy, without going into bankruptcy. So that way they know they're gonna have a job. They're not panicked. They don't feel well about it because they don't nobody want to see the company losing money in, at least in that division, at least emotionally they feel better. Yeah, so I've been talking to them over the phone. Team meetings and I even flew over to calm them down. So because they're the big… well, they’re the important part of the asset of the company. So that's why we started. But by losing them is even a bigger cost. But nobody know how long this situation is going to be, so the only one way we say, well, we take the loss. We calm them down. We're just waiting for that moment when COVID is getting to the end and we can start travelling. That we can hold their hands and train them because they cannot come to come to Canada for training. We cannot send our team over there to train them. So only when we can say, wow. But is there most company that just cut the loss and close it down or cut 50% of people off due to COVID. But we didn't do that. We basically nearly keeping everybody.

Elijah Watkins

That's amazing.

Jeffrey Chang

So, of course, the impact is millions in cost.

Elijah Watkins

Yeah, but it was the like you said you've seen customers calling you back as a result of keeping these employees in place and delivering good products. So hats off to you. That's awesome. So you went from a nothing, quote unquote, nothing company in 2010 to where you are today all over the world. Lots of employees, lots of growth. How do you manage that growth? And I guess what, what advice would you have to someone like you, right, an armchair engineer, maybe someone who has some idea. And they say, “Yeah, these barriers to entry. There's other companies that are doing this same thing. I don't know if I'm the right person to do it.” What kind of advice would you have for them.

Jeffrey Chang

Well, we run things really differently here. I'm really blessing that all my partners had 100% full trust to me, which makes a decisions a lot more easier, but also become a challenging that I makes a lot of a directional decisions and they rely on me as well. So when you say advice, to myself, that's not a whole lot. But also I can share how I do things and perhaps and it may fit some of the people that listening to it. That is at some point it… yeah, the numbers are important. The global politics also has something to do with the economy. But the very fortune part, waiting for business, regardless what happened people will we need to eat.

Elijah Watkins

Yeah.

Jeffrey Chang

That was the key point when I enter into this business because it doesn't matter if it’s good time or bad time and maybe a few months of down turn. But people need to eat regardless. So we have the confidence to continue to grow, invest. Like I said, we had nothing to lose. Everything we have today we earned it. And based on our customer handing over the funding to us and asked us to building them the equipment. So why we are concerning as long we have a good rapport, the customer still likes us. So I think the benchmark it is. So everything have a benchmark. Our benchmark is if… we still popular. We still… our customers still happy. Then it's worth to do it. If our customers start to too many complaints and our team is starting to become negative and we don't feel good about it, then it's time to put a pause on it, and say, “Hey, we’ve got to rethink in what we do.” But as long that percentage is high… nobody have 100% customer satisfaction.

Elijah Watkins

Sure.

Jeffrey Chang

But we try to get there, right? As long that number is high enough. Then I said rather than speaking, if somebody's rating is only 80% and somebody's rating is 90% and we’re in the 95% level. But at meantime, how we're going to satisfy and try our best to satisfy the other 5% and maintain the 95? On the other hand, I think it gives us enough confidence to continue to grow because the industry needed us and needed somebody like us to provide them the equipment. So whether it’s going to be FPS or somebody else that would be a partner. So we just want to be there and be their partner.

Elijah Watkins

Where do you think the industry is going? You know, maybe kind of read the chicken bones and the tea leaves and say the food storage food, preservation space, what's kind of on the horizon for your industry as a whole?

Jeffrey Chang

Well, what I'm seeing in our industry today is actually that is quite… the practice in the last 30 years, it's coming from a lot of partnerships to lost trust between the customer and suppliers.

Elijah Watkins

OK.

Jeffrey Chang

Now we actually want, our wish list is to rebuild that relationship, a trust partnership because I get everybody loves a partner, a trust partner. But how are you going to find one, right? When one or two, three partners let you down, you probably wouldn't trust them before. It needs a lot of confidence and gamble to continue to find that trust partner. So that's why most customers have a motive, multi-international brand in the factories which is makes it really difficult to maintain. So when that time happens, who is going to take care of your user partner? So you can see the industry's been moving from… it's still gonna be… I don't know it's gonna be even feasible to make that, to rebuild that. But like I said when we started 12 years ago, we want to be the most hygienic, the best freezer manufacturer. Nobody think it can happen. But today the same thing. You say how can you have it? How can you make the customer trust you and handing over all of their business to you? Wow. Well, we're going to prove ourself. We're going to earn it. We're going to… if we do our job each day better and think on behalf of the customer and take care of them, in some point, we spoil them. And to the point, they say, “Wow, in fact we didn't know that we rely on you so much.” But of course, and some supplier will become really greedy and then they start to overcharging the customer and not supporting the customer. And that's why they lost it because earning… maintaining a customer actually is harder than earning a customer. Yeah, at the end it is the partnership that true trusting partnership, that how is also going back to the beginning. If we always think about the client, that you always do the best for them, right? If you’re the client, are you need to spend that extra dollar when it's not needed? And if needed, they don't want to spend that dollar. At least, we on their behalf we always at least tell them the story. “I think you will need it, my friend.” They will say, “No, I don't have it. I don't want it.” But I say, “There's many way of doing it. We can help you to structure the payment. We can help you do a lot of things because we know you need it.” Right? So we'll help them to make the right decision. So imagine if we keep doing that, where’s the customer going to go?

Elijah Watkins

Yeah. That sort of customer focus, I think is really important and you said something that kind of struck me, saying that it's harder to keep the customer than to get the customer to begin with. I think that's so true, right? You just… you make a good product. FPS makes a world class product and, yeah, people can buy it. But once they have it, do they want to buy a second one from you and a third one. And do they want to stay with you. And that’s a different story. That's a different story all together.

Jeffrey Chang

Yeah, this is the way because there's a lot of… there's a lot of manufacturing. They will focus on spending a lot of money and cost for marketing and try to earn new customers. But for us as long we can maintain I would say 99.9% of the customer base what we have today, and all we need is to find a few new customers because the existing customers are growing. So you can easily have a double digit 20-30% or even 40-50% growth.

Elijah Watkins

Just based off the customers you currently have.

Jeffrey Chang

Correct, Because the current customer they grow 10% is quite normal. The market most customer can grow between 10, 5% to 20% a year annual basis. If they're growing, we're growing. So if we find a few more customers, then those customers also add to the portfolio. So it's not that difficult. But you'll be surprised how many, how many manufacturing they're losing customers faster than they find new customers because they… because emotionally, you're gonna fight really hard to earn this customer. You do everything you can, even need to go to clean the toilet. You want to do that. [laughter] I want to earn this customer. I do everything they want me to do.

Elijah Watkins

Yeah.

Jeffrey Chang

OK? Within the limit. So there's always a limit. Within the limit, you want to do everything to earn that customer. OK, you want to, if they, you want to drive them, you want to take them, you want to show them and travel around to show them all the good things. But once you get the customer into your portfolio, are you still have the same mentality? That's the key. Most of the people will slowly back off after like 3-4 years after they buy multiple units. Oh, it's in the pocket, right? Why we need to serve them like this? Let's focus the energy to a new customer. I say, no. We just need to grow a bigger team. So the one team is maintaining them. The other team is going to find the new ones.

Elijah Watkins

I think, I think that's just so true and I, lost art, you know, the service level just isn't, I think, where it was even ten years ago. So it's awesome to see FPS is kind of holding that line and even expanding it. It’s neat.

Jeffrey Chang

Why there's… I guess you don't need an education to understand that, right? [laughter]

Elijah Watkins

Well, Jeff, thank you so much for taking the time to be here today and for sharing your story and the story of FPS with our listeners. I mean it's been great. It's really been great.

Jeffrey Chang

Well, thank you. I appreciate it because I always wanted to share my experience and you know, as an immigrant, I think we work much, much harder to earn what we have today. But I guess it's at the end of it sharing our story with anybody can benefit from it that is, yeah, that's more than enough for me.

Elijah Watkins

Thank you for listening to the Stoel Rives Deeply Rooted podcast. To follow along and get additional insights from each episode, visit www.stoel.com. Please also take a moment to rate and subscribe to the podcast on Apple, Spotify or wherever you listen to podcasts.

The views expressed on this podcast are solely those of the individuals involved and may not reflect the views of Stoel Rives LLP. Participation in this podcast by any individual is not an endorsement of any view or opinion expressed. This is not legal advice and the podcast does not create an attorney-client relationship.

About Stoel Rives | Deeply Rooted Podcast

This season, our hosts are interviewing respected industry leaders and discussing how they, and their companies, are embracing innovation and capitalizing on new opportunities to move their industries forward in an ever-changing world. The first three episodes will be hosted by Claire Mitchell, Merissa Moeller and Kristin Russell of Stoel Rives’ agribusiness, food, beverage and timber industry group.

The views expressed in this podcast are solely those of the individuals involved and may not reflect the views of Stoel Rives LLP. Participation in this podcast by any individual is not an endorsement of any view or opinion expressed.

This is not legal advice and the podcast doesn't create an attorney-client relationship.

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